Cash-strapped Mozambique is considering approaching China—its largest bilateral creditor—to restructure $1.4 billion in debt amid mounting fiscal challenges.
President Daniel Chapo confirmed the possible move during an international development finance event in Seville, Spain, as the country grapples with back-to-back economic contractions and the impact of widespread unrest following its disputed October elections.
The violence, which caused significant damage to businesses and infrastructure, has battered government revenues and left Mozambique’s economic recovery fragile. With debt sustainability concerns growing, President Chapo acknowledged that some bilateral lenders are already open to supporting Mozambique through measures such as debt rescheduling or even forgiveness.
“Rescheduling or even forgiveness of the debt we have with our largest bilateral creditor is not an outlandish idea,” Chapo said when asked if Mozambique might request China’s help. He stressed that any discussions would happen within a partnership framework, emphasising that Mozambique remains committed to honouring its international obligations.
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If Mozambique proceeds, it will join a growing list of African nations—including Ghana, Zambia, and Ethiopia—forced to restructure debts amid soaring borrowing costs and constrained public finances. China currently holds about 14% of Mozambique’s external public debt, but no formal restructuring talks have begun.
According to official figures, Mozambique’s total external public debt stood at around $9.8 billion at the end of 2024. With debt servicing straining limited fiscal resources, the government is actively engaging with strategic partners to ease pressure and restore macroeconomic stability.
President Chapo also revealed that Mozambique is in talks with the International Monetary Fund (IMF) to secure a new funding programme after exiting an earlier deal that no longer aligned with the new administration’s policy direction. Chapo said he expects an agreement could be reached within months.
